Thursday, July 11, 2013 12:43 pm

Duke announces her departure from Fed board

By MARTIN CRUTSINGERAP Economics Writer

Elizabeth Duke announced Thursday that she will step down from the Federal Reserve's board in Washington at the end of August.

Duke, 60, has been on the Fed board since August 2008. Her term officially ended in January 2012, but board members can remain until someone is chosen to replace them.

Her departure creates a vacancy for President Barack Obama to fill at time when he may also need to find a successor for Chairman Ben Bernanke. Bernanke is expected to leave the Fed when his second four-year term ends in January.

In her resignation letter to Obama, Duke praised Bernanke's leadership during the 2008 financial crisis. She said the Fed under Bernanke's guidance had "met every test in a thoughtful, innovative and effective way."

Duke was appointed by President George W. Bush to serve the remainder of a 14-year term. In a statement released by the Fed, she did not say what her plans were.

Before joining the board, Duke had been chief operating officer of TowneBank, a Virginia-based community bank. On the board, Duke specialized in bank regulatory issues.

The Fed board is composed of seven members, or "governors," including the chairman. Governors serve 14-year terms, which are intended to help insulate them from political pressures.

All seven governors are also voting members of the Federal Open Market Committee, the panel that sets the Fed's interest-rate policies. The FOMC has 12 voting members at any one time. The president of the Federal Reserve Bank of New York always has a vote. The four other votes rotate annually among 11 other regional Fed bank presidents.

During her years on the Fed's board, Duke has been a steady Bernanke ally who has sided with his efforts to keep interest rates low to support the economy.

In addition to participating in interest-rate decisions, Fed board members oversee the regulation of bank-holding companies, which include the nation's biggest banks.

Fed board members are nominated by the president and confirmed by the Senate. Regional Fed bank presidents are chosen by the board of each regional bank.